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Authors

Paul C. Nylen

Abstract

Virtual currencies demanded serious attention in 2017 due to public interest, media attention, and investor appetite. With this increased attention on virtual currencies comes significant business, legal, and tax risks. This article serves as a launching pad for those tax risks, and attempts to predict how the IRS will react. By focusing on the IRS’s treatment of virtual currency as property, as well as discussing other tax issues like Foreign Bank Account Reporting (FBAR) compliance and like-kind exchanges under Internal Revenue Code section 1031, this article highlights the difficulty the IRS will have in regulating the ever-expanding world of virtual currencies and crypto assets. While no silver bullet is currently available to the IRS, allowing virtual currencies to be classified as property ends up creating more questions than it does answers. This article explores those questions.

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